A protected trust deed is a Scottish debt solution which allows people to write off up to 90% of their unsecured debt.
Only people who have lived in Scotland for 6 months can enter a protected trust deed, the equivalent in the rest of the UK is an IVA.
There are many consequences to a protected trust deed which can make it a dangerous debt solution to enter. Although for the right person a protected trust deed can be the perfect solution.
The key to not entering it wrongly is being knowledgeable about what a trust deed is and how is works.
How A Protected Trust Deed Works
The person in debt makes a proposal to their creditors repay at least 10% of the overall debt for three years.
At the end of the three years any debt, interest or charges still outstanding will be written off by the creditors.
An insolvency practitioner will manage the debt solution by putting forward the proposal, collecting and dispersing the payments.
The insolvency practitioner is also responsible for recouping as much money as possible for the creditors.
This means any additional, non essential, assets could be forced to be sold and any money received could be paid to debts.
Entering A Protected Trust Deed
Before trying to enter a protected trust deed everyone should seek qualified, free and high quality debt advice.
A reputable debt advice organisation will make sure a protected trust deed is the best debt solution available.
This will also stop people wrongly being entered into a protected trust deed and losing savings or inheritance.
Once the debt adviser has assessed a protected trust deed is the right debt solution they may do a few things.
Some debt advice organisations will have an insolvency practitioner and manage the protected trust deed themselves. Other organisations will refer people to a specialist insolvency practitioner who will contact them. A few organisations will just give clients a number to contact an insolvency practitioner.